Nevada Trucking Association challenges prevailing wage determination

The Nevada Trucking Association and two other trade associations are suing the U.S. Department of Labor for allegations of erroneously calculating the prevailing wage for government contracts.

In addition to the Nevada Trucking Association, the Nevada chapters of the Associated General Contractors of America and Associated Builders and Contractors filed a complaint in a Nevada federal court against Labor Secretary Marty Walsh. The three associations accuse the Department of Labor of illegally applying southern Nevada wage data to calculations for northern Nevada counties’ prevailing wage.

The Nevada Trucking Association claims the Department of Labor violated the Davis-Bacon Act, which establishes how much contractors must pay employees when doing contract work for the federal government. That act requires contractors to pay workers at least the prevailing wages and fringe benefits for similar projects “in the civil subdivision of the state in which the work is to be performed.” A prevailing wage is determined by the secretary of labor.

Prevailing wages in federal contracts

According to Tile 29 Section 1.2(a) of the Code of Federal Regulations, a prevailing wage is defined as the wage paid to more than 50% of the laborers or mechanics working on similar projects in the area around the same time. If there is no majority wage, the prevailing wage is the average of the wages paid, weighted by the total employed in the classification. Section 1.2(b) defines “area” as “the city, town, village, county or other civil subdivision of the state in which the work is to be performed.”

In the event there is insufficient wage data due to a lack of similar projects in the area in the past year, the Department of Labor can determine a prevailing wage by considering “wages paid on similar construction in surrounding counties,” according to Section 1.7(b). However, projects in metropolitan counties cannot be a source of data to determine a prevailing wage in a rural county and vice versa.

Within its complaint, the Nevada Trucking Association points out that nowhere in the Davis-Beacon Act is the Department of Labor given the authority to look outside the surrounding counties to determine prevailing wages, let alone in a part of the state “hundreds of miles away.”

Labor Department accused of knowingly and illegally using outside data

According to the lawsuit, the Department of Labor improperly used outside data when issuing its 2017 wage survey and wage determinations. The Nevada Trucking Association states that the department claims there was insufficient data for northern counties in Nevada. Consequently, it imported wage date from Clark County, which is more than 400 miles away. The associations claim this was done maliciously.

“The administrator made this claim with full knowledge that the prevailing construction wage rates in Clark County are much higher than the prevailing wages paid in northern Nevada, which is an entirely separate labor market,” the complaint states. “Based on the administrative record, the Clark County rates are in many classifications double the rates prevailing in Northern Nevada.”

The lawsuit claims that the Department of Labor’s “arbitrary and unauthorized actions” set prevailing wages in northern Nevada to levels that only exist in the Clark County area, which is “nowhere near” the projects under the contracts in question.

Furthermore, the Nevada Trucking Association argues that there was in fact sufficient wage data for northern Nevada counties. The administrator setting the prevailing wages neglected to consider the local data because the Nevada Office of the Labor Commissioner holds the burden of submitting that information. However, the trade associations point out that the data was publicly available, which the administrator knew or should have known.

In letters dated October 2019 and April 2020, the Associated General Contractors of America requested a review of the prevailing wage determination, which was supported by the Office of the Labor Commissioner. In July 2020, the two other trade associations joined in the request for review. The request was denied.

The Administrative Review Board argues that the administrator was entitled to ignore the Office of Labor Commissioner’s wage data because it was submitted too late, despite the fact the information is publicly available. Also, the board claims that the administrator “exercised reasonable discretion when she used statewide data to calculate prevailing rates in this case.”

As of publication, the Department of Labor had not formally responded to the lawsuit. LL